Lockheed Martin 2007 Annual Report Download - page 40

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Section Roadmap
The financial section of our Form 10-K includes management’s discussion and analysis, our consolidated financial
statements, the notes to those financial statements and a five year summary of financial information. We have prepared the
following summary, or “roadmap,” to assist in your review of the financial section. It is designed to give you an overview of
our Company and alert you as to some of the more important activities and events that occurred this year.
Our Business
We principally research, design, develop, manufacture, integrate, operate and sustain advanced technology systems and
products, and provide a broad range of management, engineering, technical, scientific, logistic and information services. We
mainly serve customers in domestic and international defense, civil agencies, and homeland security. Our sales to agencies of
the U.S. Government, including those to the Department of Defense (DoD), represented 84% of our sales in 2007. Of the
remaining 16% of sales, approximately 13% related to sales to international customers (including foreign military sales
funded, in whole or in part, by the U.S. Government), with the remainder attributable to commercial and other customers. In
2006 and 2005, sales to agencies of the U.S. Government represented 84% and 85% of our total sales. Our main areas of
focus are in defense, space, intelligence, homeland security and government information technology.
In February 2007, we announced a realignment of our operations to enhance support for critical customer missions and
increase our integration of resources. The realignment included the combination of our former Information Technology &
Global Services (IT&GS) and Integrated Systems & Solutions (IS&S) business segments into a new business segment named
Information Systems & Global Services (IS&GS), along with certain other changes. All business segment disclosures and
amounts in this Form 10-K have been reclassified to reflect the realignment.
We now operate in four principal business segments: Aeronautics, Electronic Systems, IS&GS and Space Systems. As a
lead systems integrator, our products and services range from electronics and information systems, including integrated
net-centric solutions, to missiles, aircraft and spacecraft. We organize our business segments based on the nature of the
products and services offered.
Financial Section Overview
The financial section includes the following:
Management’s discussion and analysis, or MD&A (pages 32 through 58) – provides our management’s view about
industry trends, risks and uncertainties relating to Lockheed Martin, accounting policies that we view as critical in light of
our business, our results of operations, including discussions about the key performance drivers of each of our business
segments, our financial position and cash flows, commitments and contingencies, important events or transactions that have
occurred over the last three years, and forward-looking information, as appropriate.
Reports related to the financial statements and internal control over financial reporting (pages 59 through 61) –
include the following:
• A report from management, indicating our responsibility for financial reporting, the financial statements, and the
system of internal control over financial reporting and an assessment of the effectiveness of those controls;
• A report from Ernst & Young LLP, an independent registered public accounting firm, which includes their opinion on
the effectiveness of our system of internal control over financial reporting; and
• A report from Ernst & Young LLP which includes their opinion on the fair presentation of our financial statements
based on their audits.
Financial statements (pages 62 through 65) – include our consolidated Statements of Earnings, Cash Flows and
Stockholders’ Equity for each of the last three years, and our Balance Sheet as of the end of the last two years. Our financial
statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP).
Notes to the financial statements (pages 66 through 95) – provide insight into and are an integral part of our financial
statements. The notes contain explanations of our significant accounting policies, details about certain of the captions on the
financial statements, information about significant events or transactions that have occurred, discussions about legal
proceedings, commitments and contingencies, and selected financial information relating to our business segments. The notes
to the financial statements also are prepared in accordance with GAAP.
32